Hi everyone I would love to use this opportunity to explain and share my opinion on what I think about DCA strategy
Dollar-cost averaging (DCA) means making smaller, equal investments on an ongoing basis, instead of making large or irregular crypto buys. DCA is just like paying for a product installmetally at a regular and planned phase until you've paid completely. By regularly buying your favorite coins, you’ll be automatically investing more over time no matter what’s going on in the crypto market. This enables you to grow your holdings, and can lower your overall cost-basis during dips.
Lump sum payment on the other hand is a payment made all at once its the exact opposite of DCA.
How DCA works
Let's say the current price of BTC is around $20,000 and your a high salary earner looking to get this asset. if you made a lump sum invest you would be getting one BTC at a cost basis of $20,000.
However, if you spread that $20,000 across five equal $4,000 buys at a cost of $20,000/BTC, $15,000/BTC, $5,000/BTC, $5,000/BTC and $25,000/BTC then your average cost basis would be $40,000, and you’d have 1.4 Bitcoin. When Bitcoin’s price goes back up, your gains will be magnified because you lowered the average cost to acquire your holdings. With dollar-cost averaging crypto you’ll be acquiring more Bitcoin even during ups and downs.
at your first buy you've acquired 20% of 1 btc at price $20,000
your second purchase at price $15,000 you've gotten 26.66% of 1btc
your 3rd and 4th purchase at price $5000
you've gotten a total of 80% of 1 Btc with each buy
your final buy at price $25,000 would be about 16% of 1Btc
in total you've gotten about 2.3 Btc
But at times using the Dca strategy could be against you it could do the exact opposite to your average cost could also be increased especially if your buying in a bull run . But I guess that's the while purpose of it to buy installmetally it could be at your advantage but its a win win cause you would still get your btc . I hope this have helped you understand a little about what DCA is all about.